Fed Chairman Powell announced that his department will not rush to raise rates
The ICE US Dollar Index noticeably dropped to a 3-week low after the statement by the Fed Chairman. In 2018, the rate increased 4 times. This year its growth is questionable. A significant part of investors believe that in 2020 the Fed may start another round of easing monetary policy and begin to reduce the rate. An additional negative was the publication of macroeconomic data on new buildings in the US (U.S. housing starts). In December it fell to a 2-year low. US stocks fell at the end of trading. Shares of the construction manufacturer and other wheeled vehicles Caterpillar fell 1.8% after the UBS Bank downgraded their rating. Today at 14:30 CET the trade balance for December will be released in the USA . At 16:00 CET data on the secondary real estate market, industrial orders and orders for durable goods will be published. Yesterday’s consumer confidence index for February turned out to be positive, if even good data are released today, it can support the dollar.
EURUSD continued strong growth
This was mainly due to the weakening of the US dollar against the background of the Fed’s soft policy. In addition, the growth of the euro could contribute to the UK plans for the settlement of Brexit. Surely due to this the British pound strengthened much stronger, but for the euro also positive sign. Yesterday’s change in European stock indexes was minimal. British FTSE 100 dropped amid a strong pound fortification. It reduces the effectiveness of British exporting companies. Today at 11:00 CET indices of business and economic confidence and activity will be released in the Eurozone.
The Japanese Nikkei again gained, although it could not update the recent maximum
Investors’ attention is focused on the US President Donald Trump’s and the DPRK head Kim Jong Un meeting in Vietnam. It significantly reduces global risks. The US promised prosperity to the DPRK in exchange for abandoning nuclear technology. All this contributed to the strengthening of the Japanese yen and supported Nikkei slightly. Shares of pharmaceutical companies Daiichi Sankyo (+ 3.7%) and Takeda Pharmaceutical (+ 2.1%), as well as real estate companies Mitsui Fudosan, Mitsubishi Estate and Obayashi were in a good demand. Tomorrow morning will be released important macroeconomic data on industrial production and retail trade for January in Japan. The Australianand New Zealand dollar fell this morning due to unexpected cuts in construction costs in Australia for December. New Zealand’s trade balance for January, as was expected, turned out to be negative.
Quotations for NatGas continues slightly growing
This occurs despite the imminent end of the winter season when gas is used for heating. Quotations are supported by extremely cold weather in Canada. In Calgary the temperature dropped to -29 degrees. In addition the export of liquefied natural gas from the United States this week is 5.2 billion cubic feet, which is 67% more than last year and 5 times more than 5 years ago. As a result the total gas consumption in the US including raw materials for export to Canada, Mexico and other countries is now 20% more than last year.